Why did my credit score drop for no reason?

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    Jordan Moore
    Keymaster
    #8774
    Team StellarFi
    Keymaster

    Your credit score is determined by many factors in your credit report. Credit score changes usually don’t happen without reason; it is possible that you may have missed some recent changes that may have occurred in your finances. Here are a few possible reasons:

    You closed a credit card: If you happened to recently close one of your credit card accounts, your credit score may decrease because your credit utilization increases. Credit utilization accounts for 30% of your FICO® score. The older your accounts, the higher your score, so closing an older account reduces the average age of your credit accounts.

    You paid off a long-standing loan: If you recently paid off a car or mortgage loan that has been on your credit report for a while, it would have built a long positive credit history. Paying it off will cause a slight drop in your score.

    You opened a new credit account or applied for a new loan: This also drops your credit score in two ways: a) by reducing the average age of your credit accounts; and b) it gives a hard inquiry on your credit history. The shorter your credit history, the lower your score can be, so new accounts will cause your score to drop in general. A new credit card also means a hard inquiry into your credit report that will temporarily cause your score to drop.

    Errors in your credit report: Reviewing your credit reports regularly is recommended because there may be some errors that may be putting a dent in your credit score. Fixing these errors may take some time, but disputing them can help significantly.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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